Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd

• Jurisdiction: Australia Federal only
• Judge: French CJ,Kiefel J,Heydon,Crennan,Bell JJ
• Judgment Date: 29 September 2010
• Neutral Citation: 2010-0929 HCA A,[2010] HCA 31
• Court: High Court
• Docket Number: M69/2009
• Date: 29 September 2010

[2010] HCA 31

HIGH COURT OF AUSTRALIA

French CJ, Heydon, Crennan, Kiefel and Bell JJ

M69/2009

Miller & Associates Insurance Broking Pty Ltd

Applicant

and

Bmw Australia Finance Limited

Respondent

Representation

J J Gleeson SC with G Crafti for the applicant (instructed by Minter Ellison)

A C Archibald QC with M A Robins for the respondent (instructed by Francis V Gallichio Lawyers)

Trade Practices Act 1974 (Cth), ss 4(2)(a), 4(2)(c)(i), 52.

Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Limited

Trade practices — Misleading or deceptive conduct — Non-disclosure — Representation by supply of certificate of insurance and/or non-disclosure of nature of insurance — Whether provision of certificate by insurance broker to experienced premium lender misrepresented cancellability of underlying policy — Whether failure of broker to inform lender in terms that policy was non-cancellable constituted misleading or deceptive conduct.

Appeal — Powers of appellate court — Review of trial judge's findings of fact — Where finding allegedly based on mistaken understanding of agreed fact and inferences arising from it — Whether finding ‘glaringly improbable’ or contrary to ‘compelling inferences’.

Practice and procedure — Filing of submissions — Respondent filed submissions after hearing outside terms of leave granted — Whether permissible to file supplementary written submissions after hearing without leave.

Words and phrases — ‘misleading or deceptive conduct’.

ORDER

Special leave to appeal granted.

Amended draft notice of appeal dated 19 January 2010 treated as filed in the appeal, and appeal treated as instituted and heard instanter and allowed with costs.

Set aside the order of the Court of Appeal of the Supreme Court of Victoria made on 11 June 2009 and, in lieu thereof, order that the appeal to that Court be dismissed with costs.

French CJ and Kiefel J.

Introduction

1 On 2 October 2000, Consolidated Timber Holdings Ltd (‘CTHL’) made an application to a financier, BMW Australia Finance Limited (‘BMW’), for an insurance premium funding loan in respect of an insurance policy. In making the application, CTHL had retained the services of an insurance broker, Miller & Associates Insurance Broking Pty Ltd (‘Miller’). CTHL owned and managed plantations in Australia and overseas. The policy in respect of which it sought a premium loan was a non-cancellable cost-of-production insurance policy (‘the policy’) dated 7 September 1999, which had been issued by HIH Casualty and General Insurance Limited (‘HIH’) to Plantation Management Corporation Ltd (‘PMC’) and St George Bank Limited. PMC was, at the relevant time, being acquired by CTHL. After a convoluted process characterised by error and mismanagement, BMW provided the funding to CTHL in the amount of $3.975 million in December 2000. $1,264,758.40 was repaid by CTHL. The balance was not repaid and was never recovered. A detailed account of the circumstances surrounding the application for the loan and the provision of the loan is set out in the judgment of Heydon, Crennan and Bell JJ 1.

2 BMW looked to Miller for a remedy. It alleged, in proceedings against Miller in the Supreme Court of Victoria, that Miller had engaged in misleading or deceptive conduct and had been negligent in connection with documentation supplied to it in support of the loan application. The claim for misleading or deceptive conduct was based on a memorandum and a certificate of insurance (‘the HIH certificate’) provided to BMW by Miller which, it was said, conveyed the misrepresentation that the policy covered property and was assignable and cancellable. An alternative basis for the claim was that Miller had not disclosed the important fact that the policy was neither assignable nor cancellable and therefore of little use as security for the loan.

3 BMW was unsuccessful at first instance before Byrne J 2 but was successful in the Court of Appeal of the Supreme Court of Victoria (Ashley and Neave JJA and Robson AJA) 3. Miller applied for special leave to appeal against

the decision of the Court of Appeal and its application was referred to this Court for argument as on an appeal.

4 We agree with the orders proposed in the judgment of Heydon, Crennan and Bell JJ and, subject to what follows, with the reasons given in that judgment. The grant of special leave is warranted on the basis that the Court of Appeal erred in interfering with the primary judge's findings of fact. It failed to apply the principles enunciated by this Court in Fox v Percy4. It so failed, at least in part, because of a misunderstanding of the basis of a critical finding of fact made by the primary judge 5. There is one issue which we wish specifically to consider. That issue is non-disclosure as a species or element of misleading or deceptive conduct in contravention of s 52 of the Trade Practices Act 1974 (Cth).

The pleading of misleading or deceptive conduct

5 The cause of action for contravention of statutory prohibitions against conduct in trade or commerce that is misleading or deceptive or is likely to mislead or deceive has become a staple of civil litigation in Australian courts at all levels 6. Its frequent invocation, in cases to which it is applicable, reflects its simplicity relative to the torts of negligence, deceit and passing off. Its pleading, however, requires consideration of the words of the relevant statute and their judicial exposition since the cause of action first entered Australian law in 1974. It requires a clear identification of the conduct said to be misleading or deceptive. Where silence or non-disclosure is relied upon, the pleading should identify whether it is alleged of itself to be, in the circumstances of the case, misleading or deceptive conduct or whether it is an element of conduct, including other acts or omissions, said to be misleading or deceptive.

6 The pleading of BMW's case in misleading or deceptive conduct was not a model of clarity. In that respect it may have contributed to some conceptual difficulty in the judgment of the Court of Appeal. BMW began the relevant part of the pleading by alleging that it had a reasonable expectation that Miller would provide an accurate response in reply to its request for information about the policy and would not provide the memorandum and HIH certificate knowing, without disclosing, that the policy did not comply with BMW's security requirements. BMW also claimed to have a reasonable expectation that Miller

would disclose to it information which rendered anything initially conveyed in its response to BMW's request inaccurate, incomplete, misleading or false. BMW then asserted that Miller did not, at any relevant time, make any disclosure to it of any information about the insurance other than that contained in the memorandum and in the HIH certificate. This part of the statement of claim is only comprehensible as supportive of a claim of misleading or deceptive conduct by reference to the pleading that followed.

7 In the paragraphs of the statement of claim that followed, BMW alleged that Miller had made a number of representations to it. These were particularised by reference to circumstances and conduct. Facts falsifying the representations were pleaded. Mixed up with that pleading were allegations of the falsity of the statements in the certificate of insurance and Miller's failure to give BMW accurate, complete or truthful information about the insurance. Further, and (it seems) superfluously, BMW alleged that Miller did not disclose to it any of the falsifying facts, the falsity of the statement in the HIH certificate or Miller's own failure to give accurate, complete or truthful information to BMW. As to that, failure to confess a misrepresentation is not a necessary element of the cause of action in misleading or deceptive conduct by misrepresentation. It can raise a false issue and suggest that a case relying upon non-disclosure is being presented when it is not.

The primary judge's disposition of the case in misleading or deceptive conduct

8 The primary judge described the two limbs of BMW's case in misleading or deceptive conduct succinctly when he said 7:

‘In essence, the complaint is that Miller & Associates represented that the underlying policy was cancellable and therefore good security for the loan or that it did not tell the lender that it was in fact a non-cancellable policy and not good security.’

9 Adversely to the first limb of BMW's case, the primary judge found that ‘the HIH certificate, properly understood, did not convey the represented fact’ 8. The primary judge held that at best, from BMW's point of view, it created uncertainty. Neither of the relevant officers of BMW, Reynolds and Jones, subjected the certificate to a careful analysis 9:

‘they saw the word “properties” and jumped to the erroneous conclusion that the policy concerned property. From this, they … made the further leap to the conclusion that the policy was cancellable. Neither of these conclusions was warranted by the terms of the document or by the practice of reasonable or prudent premium lenders.’

His Honour also observed that, by the time the loan was made in December, BMW had received the policy 10. Its officers could have read and understood it, or sought advice upon it, if they were so minded. BMW was ‘the author of its own misfortune’ 11. The primary judge's treatment of the receipt of the policy may be seen as going either to the characterisation of Miller's conduct overall or to the existence of a causal connection between that conduct and BMW's loss 12.

10 In relation to the non-disclosure case, the primary judge stated the applicable principle when he said, ‘[t]he question whether a failure to provide information amounts to misleading and [sic] deceptive conduct must depend upon...